Venezuela chocolate king thrives despite controls

Cacao pods ripen to colors from bright yellow to crimson in the forest-shaded plantations of Venezuela, where some of the world's finest chocolate is born.

The crop is transformed into gourmet bars that sell briskly in Venezuela and are exported to the United States, Europe and Japan by the country's premier chocolate maker, Chocolates El Rey, or The King. As the company has won success and international acclaim, though, it has also had to cope with difficulties brought on by President Hugo Chavez's socialist government.

El Rey's growing business illustrates how some entrepreneurs are managing to hold on and even thrive in Venezuela despite more government regulations and state takeovers of companies and farmland. Producers of crops such as coffee and sugar have struggled in the face of price controls and cheap imports.

El Rey used to go through just four bureaucratic steps to export its chocolate. Now, owner Jorge Redmond says the list of requirements has grown to more than 50.

Some cacao plantations have been taken over by the government, and while those seizures haven't affected El Rey, the company suffered a major setback a decade ago when its model farm was overrun by squatters. Those who took the land planted corn and cut down towering mahogany and saman trees.

El Rey's attempts to get the farm back have been fruitless, and Redmond acknowledges feeling worried about the possibility of one day being targeted for expropriation by the government. Still, he remains optimistic about cacao and plans new investments to increase output at the company's plant, which is already churning out 3,000 tons of chocolate a year. El Rey has a workforce of more than 200 employees, and plans to increase its exports.

"We're going to stay here and fight it out. We're not giving up. And I think most other companies are going to do the same," said Redmond, who has been leading El Rey for nearly four decades as its majority owner and president. "You have to keep working. My philosophy is that we're going to last longer than the government."

Chavez, for his part, has talked about harnessing Venezuela's potential in cacao and increasing exports. His government has already established the Venezuelan Cacao Socialist Corporation, which has invested in several processing plants.

Redmond said officials from the state company explained in a private meeting with buyers in November that the company plans to buy about 2,000 tons directly from growers in the region of Barlovento, east of Caracas, and then divvy it up in the industry.

"We were very clear ... that we're only going to buy what suits us," Redmond said at his office in Caracas, which is decorated with wooden cacao pods and smells of chocolate.

Redmond's company has found a winning strategy by paying more for quality cacao, providing assistance to small farmers and marketing its chocolate in Venezuela and around the world.

Some of the aromatic cacao comes from independent farmers in Barlovento, where the lush coastal forests sprout with moss and bromeliads along with pea-sized cacao blossoms.

Lifelong grower Pablo Planchar said he is thankful to El Rey for the higher prices it pays for each burlap sack of cacao. He's also grateful that the company has provided equipment for pruning trees and special boxes made of apamate wood where he ferments his cacao.

The cacao is then spread out and raked on a concrete patio for sun-drying, where a sliding metal roof installed by El Rey helps keep the crop dry when it rains.

"It's the institution that has helped us the most," Planchar said of the company.

On a recent morning, Planchar and six other men squatted among the trees, cracking open the cacao pods with machetes and scooping out clumps of white pulp and seeds with their fingers.

"This one's ready. Look at the color," Planchar said, cradling a golden yellow pod in his hands. While they worked, he and the other men smoked cigars and passed around a bottle of homemade liquor made from local plants and spices.

Planchar said he can earn the equivalent of $465 a month, and he hopes for higher prices and more assistance of the sort El Rey is providing, as well as credit. His typical earnings are less than the minimum wage of $476 for those with regular full-time jobs, and as a result many independent farmers do other work to make ends meet.

Venezuela's cacao has long been highly prized as an export, harvested by slaves during Spanish colonial times in the 1600s and shipped off to Europe in increasing amounts. Then came oil in the early 20th century, passing coffee and cacao, and taking root as the lifeblood of Venezuela's economy.

Today Venezuela produces about 17,000 tons of cacao a year, less than one-half of 1 percent of the world's production, said Cesar Guevara, president of the country's cacao industry association. Venezuela is one of a select group of countries producing fine aromatic varieties of cacao, along with Ecuador, Trinidad and Tobago, and some other Caribbean islands. Nonetheless, cacao has long been viewed as an artisanal crop here and hasn't been promoted for export on a large scale.

Connoisseurs differentiate between the rich assortment of varieties of cacao in Venezuela, with names such as Porcelana and Rio Caribe, as they would with fine wines.

"Venezuela has always been a fantastic, wonderful chocolate for me," said Michael Recchiuti, a chocolatier in San Francisco, California, who chooses Venezuelan chocolate for some of his creations and says it has a distinctive flavor with touches of yellow fruit and "blond tobacco" notes. He said he considers it to be among the world's finest, along with chocolates from Madagascar, Ecuador and other countries.

El Rey's business has expanded since 1995, when it launched a line of single-bean variety bars. They come in shades from milk chocolate to dark chocolate named after varieties of shade trees found on plantations.

Another business that has been flourishing is the family-owned Hacienda San Jose on the eastern Paria Peninsula, which has been producing cacao since 1830. Sales manager Claudia Franceschi, who represents the family's sixth generation in the business, said domestic sales of their Chocolate San Jose bars have more than doubled recently and a new brand of dark chocolates will be exported starting next year.

German-born Kai Rosenberg, however, tells a different story. He said his small plantations were seized by the government without warning when National Guard troops arrived in 2010. "There was no explanation. They just came and put a lock on my door and said we had to go," said Rosenberg, who hasn't been able to talk with anyone in the government since about compensation.

"They don't want to pay, and this is the rule rather than the exception," said Rosenberg, who for nearly three decades worked to recover rare varieties of criollo cacao. He is now challenging the government in court but isn't optimistic about his chances.

Meanwhile, the government's plan to buy and sell cacao in Barlovento remains up in the air; private companies such as El Rey and Nestle continue to lead the market nationwide. "We're not exactly sure how this is going to pan out," Redmond said. Officials with the state company couldn't be reached for comment.

In a previous state foray into the market in the 1970s, the government sought to establish a monopoly to buy and sell cacao. But Redmond and others say that led to a disastrous drop in production and the effort was scrapped.

For now, El Rey is focusing on its own efforts, including producing a "private reserve" chocolate brand with a variety of cacao once grown on the same model farm that was seized by squatters. It also has adapted to expanding regulations, obtaining documents showing compliance with labor obligations and permits to move shipments both within the country and through the ports.

In order to ensure quality, it's providing regular advice to small farmers, a job that falls to agricultural scientist Francisco Betancourt.

While chatting with one farmer recently, Betancourt rolled a freshly dried cacao bean between his fingers, then raised it to his nose and declared, "This one's beautiful."

It smelled nutty and fruity, like the beginnings of a delicious chocolate bar.

In this photo taken Nov 15, 2012, scientist Francisco Betancourt points to a high quality selection of cacao beans at a cacao plantation in Cano Rico, Venezuela. Cacao pods that ripen in the forest-shaded plantations of Venezuela are transformed into some of the world's finest chocolate. The crop is converted into gourmet bars and exported to the United States, Europe and Japan by the country's premier chocolate maker, Chocolates El Rey, or The King. As the company has won international acclaim, it has also had to cope with a host of obstacles brought on by President Hugo Chavez's government. El Rey used to go through just four bureaucratic steps to export a shipment. Now the list of requirements has grown to more than 50. (AP Photo/Ariana Cubillos)